2024-04-04 21:52:00
Getty Images/Reuters
Former President Donald Trump, left, and New York State Attorney General Letitia James.
CNN
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The New York attorney general’s office is raising questions about the $175 million bond Donald Trump posted in the civil fraud case and has asked for more information to prove it’s financially sound.
Trump filed the bond Monday night after gaining a reprieve from a New York appeals court that lowered the amount he needed to post from $464 million to $175 million. The lifeline gave Trump more time to obtain a bond after telling the court 30 underwriters refused to back a bond for nearly half a billion dollars.
The attorney general’s office, led by Democrat Letitia James, on Thursday took a step to challenge the soundness of the deal and filed a “notice of exception to the sufficiency of the surety” to seek additional information from Trump or the underwriter about the bond because the insurer is not regulated by New York state.
Judge Arthur Engoron set a hearing for April 22.
On Monday, California-based Knight Specialty Insurance Company agreed to underwrite the bond. Don Hankey, the chairman and majority shareholder of Knight Specialty Insurance, told CNN on Tuesday that Trump provided $175 million in cash as collateral for the bond.
Lawyers familiar with bonds say it’s fair for the attorney general’s office to want to understand the collateral used to support the bond. Trump can ask the judge to sign-off on Knight or pair Knight with another company that is authorized in New York.
“If they seek court approval of Knight Specialty, I believe that the attorney general will want proof that the company is actually holding the $175 million in cash collateral so the bond can be immediately paid if the judgment is affirmed without needing to wait to try to liquidate pledged assets,” said Bruce Lederman, an attorney with DL Partners, who has experience obtaining bonds.
Knight Specialty and its parent company are not authorized to issue surety bonds in New York state and therefore can’t obtain a certificate from the New York Department of Financial Services, which is usually part of a bond package. The attorney general’s office asked for additional information within 10 days, or it said the bond will not be in effect.
By posting the bond, Trump stopped the attorney general’s office from moving to enforce the judgment by seizing assets. Trump is appealing the judgment and the judge’s finding that he is liable for fraud.
Earlier Thursday, Trump provided additional information about the bond to include financial statements of the underwriter. The new documents indicate Knight Specialty Insurance Company had total assets of $539 million as of the end of 2023 and $138 million in surplus to policy holders. The parent company’s total assets are $2.2 billion with $1 million in surplus, according to the filing.
Lederman said in New York a company is not supposed to underwrite a bond for more than 10% of its surplus cash.
Trump’s attorney accused the attorney general’s office of trying to be purposely troublesome for the former president.
“After hiding out in silence following an embarrassing loss in the First Department which does not bode well for the future of her baseless and vindictive political crusade, the Attorney General now seeks to stir up some equally baseless public quarrel in a desperate effort to regain relevance,” said Chris Kise, an attorney for Trump.
The challenge is the latest twist in the years-long battle between the Trump and the attorney general’s office, which also on Thursday sought a more direct line into the bond negotiations.
Lawyers for the attorney general’s office asked Engoron to explicitly authorize the independent monitor overseeing the Trump Organization to share information with any party in the case. Last month, the judge directed the Trump Organization to supply detailed information to the monitor about its efforts to obtain bonds to cover judgments.
The attorney general’s office also asked the judge to order the monitor to dig into the guilty plea of Allen Weisselberg, the former chief financial officer of the Trump Organization, who admitted he lied to the state during its investigation into Trump’s finances.
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